US authorities are understood to be investigating whether Morgan Stanley misled investors over mortgage derivatives.
The Wall Street Journal reports the bank arranged and marketed pools of bond-related investments known as collateralized debt obligations (CDOs), on which its trading desk sometimes bet on a fall in their value.
It follows the SEC charging Goldman Sachs with fraud last month over the marketing of a subprime mortgage product.
In a press conference today in Tokyo, Morgan Stanley chief executive James Gorman said he had no knowledge of an US Federal investigation into his firm.
"We have not been contacted by the Justice Department about any transactions that were raised in the Wall Street Journal article," he says.
"We have no reason to believe there is any substance behind any supposed investigation."
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